Morgan Stanley anticipates that Apple will surpass expectations when it reports its fiscal first-quarter results. Analyst Erik Woodring suggests a potential revenue beat, driven by strong iPhone 17 demand. This positive outlook could offset near-term cost pressures. The firm maintains an Overweight rating and a $315 price target for Apple shares.

Despite the positive revenue forecast, Morgan Stanley cautions that cost dynamics may impact earnings momentum. The firm's analysts noted that consensus estimates are too low on operating expenses, which could limit earnings growth. Gross margin headwinds tied to memory are expected to persist into the June quarter. This could impact investor sentiment.

Looking ahead, Morgan Stanley sees potential for Apple to outperform in the second half of 2026. This is due to upcoming product launches, including the Siri re-launch, a foldable iPhone, and the 2nm iPhone 18. The bank believes Apple is trading near five-year trough valuations, offering a favorable entry point for investors.

This positive outlook comes as Apple navigates a competitive market. Investors will be closely watching the company's performance, particularly its success in introducing new products and managing costs. The iPhone remains a key driver of revenue, and its performance will be critical to Apple's future.